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Opinion: High-speed rail service makes no economic sense in Canada

Aircraft line up for takeoff at Vancouver International Airport on Wednesday, June 23, 2010.

Photograph by: Les Bazso
, Vancouver Sun

For those fortunate enough to travel to Europe this summer, or even some of North America’s older cities, take a good look at the train stations. They reveal much about architecture and cities, but also provide a clue to historic regional economies and the preferences of past travellers.

On a purely visual level, some stations are works of art. For those familiar with New York City, consider Grand Central Station, built in the golden age of rail travel and decorated with Tiffany glass and French sculptures.

Toronto’s Union Station, with its classical beaux-arts style, is a beautiful place to connect. When it was opened in 1927 by the Prince of Wales, the future British king commented that, “You build your stations like we build our cathedrals.”

Such train stations were constructed before buses and airplanes replaced trains as the default choice for mass transit, and long before the car further hastened that trend.

One can dislike that development — I prefer dense, packed cities and used trains extensively when I lived in Japan — but one cannot un-invent automobiles, buses and airplanes. Nor can one get around the plain fact of how much sense automobiles make for much inter-city travel in much of Canada, especially for families.

Still, some would attempt to use massive taxpayer subsidies to try to restore rail’s golden age. Thus the occasional suggestion that taxpayers finance high-speed rail between Calgary and Edmonton or in southern Ontario.

Even if one likes trains, that would be a substantial misallocation of resources and run against the grain of traveller preferences.

To understand why, consider a 2008 report prepared for the Alberta government on high-speed train options for the Edmonton-Calgary corridor. The authors, Transportation Economics and Management Systems, Inc. and Oliver Wyman, noted that 10 million passenger trips took place annually between Edmonton and Calgary, with 91 per cent made by automobile, six per cent by air and three per cent by bus.

The TEMS report forecast that even with the fastest high-speed train option used — and at a cost of $20-billion — only seven per cent of all passenger traffic on the corridor would use passenger rail. That’s 700,000 people annually. That’s a fraction of the passenger flows at Calgary and Edmonton airports, which annually serve 13.1 million and 6.5 million passengers respectively.

Of course, those airports serve more than just the Edmonton-Calgary corridor. But that’s the point: airline service long ago eclipsed trains (and also passenger ships) as the preferred, cheaper and faster way to travel on most medium- to long-haul trips.

It’s not that rail isn’t desirable in densely packed locales, such as in Japan, elsewhere in Asia, or in parts of Europe. But contrary to the claims of high-speed rail proponents, these things are not net contributors to the economy. They are also not net contributors to the tax base — quite the opposite.

In 2009, the director of High-Speed Rail at the International Union of Railways said that with the exception of two routes (Paris-Lyon and Tokyo-Osaka) all high-speed rail systems are subsidized. In 2010, the World Bank noted how governments should contemplate “the near certainty of copious and continuing budget support for the [high-speed rail] debt.”

A study just released in June by the University of California, Los Angeles, and which looked at Japan, found that even there, “high-speed rail simply moves jobs around the geography without creating significant new employment or economic activity.”

Even conventional rail is costly. In the case of Via Rail, since 1996, the federal government has provided $4 billion in operating and capital subsidies to that Crown corporation. It is thus fanciful to expect high-speed rail could be built and operated without large taxpayer subsidies, be it in southern Ontario or in central Alberta.

In contrast, airports in Canada, most of which have been based on a user-pay model since the 1990s, are no longer a drain on governments. Airports instead directly contribute to the public treasury through rents paid to the federal government, which owns the land. (That would also be a useful model for any improvements to train service and station upgrades, as toll roads are for highway improvements, at least where gas taxes don’t cover highway costs.)

Which brings up another summer observation: In some cities, airports are the “new” train stations, reflective of many people’s preferences, and as a destination for money and ambitious architects. Perhaps the best Canadian example is Vancouver International Airport, which is spacious, well-designed, and has an international terminal that is visually stunning with eye-catching “candy,” from totem poles to waterfalls.

To be sure, even that airport doesn’t rise to the architectural magnificence of Grand Central Station or Union Station. But it and other airports do provide a clue about the priorities of today’s travellers and travel-related commerce. In many Canadian cities, airports typify the new golden age of travel, one without government subsidies.

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